tv First Up With Susan Li Bloomberg January 19, 2014 6:00pm-8:01pm EST
♪ >> nintendo set for a tumble in tokyo after major disappointment for the wii. trying for another takeover in the united states, the latest push for t-mobile. we are going to preview china's gdp. good monday morning to you. tocome to "first up," coming you live from hong kong and streaming on your mobile and bloomberg.com.
in australia, we see the a six 200 starting the day off with fractionally lower, a bit under. 5305 is your level there. the aussie dollar is weakening at 87 u.s. cents. zealand, we are seeing fractional gains, pretty much flat right now. new zealand dollar spot is weakening, 82 and a half u.s. cents. we are also counting down to the open in japan and korea. now,ss than an hour from futures trading in chicago, it looks like it's going to be a fractional gain at the start of the session. the dollar yen is slightly strengthening this morning at 104.28 yen to the
u.s. dollar. is being so badly crushed by the playstation and next box from sony and microsoft that nintendo is forecasting a surprise lost. john is here to explain what went wrong. >>that nintendo is forecasting a surprise my favorite area, gone- game consoles. about 240 million u.s., after forecasting a profit of ¥55 billion. a dramatic shift in that earning story. shoppers turned out looking for the opposition, sony and xbox one. nintendo shipped 4.3 million wii
consoles in 15 months since the release. sold 3ft's xbox one million in just two months and playstation for sold 4.2 million. shares fell 17% in the u.s. after trade, after close. the biggest fall in 12 years. dramatic change. they have also cut their salesst for wii's console , and game sales to 19 million from 38 million. >> back in the day, nintendo was leader. families love the playing and now it seems like it's being overshadowed, right? what is its new strategy? smartphones, the migration towards that. xbox and they station, example.
stratetar energy -- new gy, software rather than hardware. they supply games to play station also, xbox. strong --in 2013, pretty games, one called pic man three. donkey kong, i remember that back in the day, super smash brothers, mario kart. console is a concern. it may go from hardware to software but not just yet. >> they're hoping the mario brand will be super for nintendo. john dawson, thanks for that. some other stories making
headlines. sunday night surprise at a friday deutsche bank warns that it lost money last quarter because of legal charges and accounting changes. the lender posted a 1.6 billion dollar pretax shortfall. analysts expected a profit. partnership with a rival last summer. the biggest budget carrier has lined up local partners and expected to start service in 2015. the ceo says the operation will avoid tokyo's airport for cost reasons and is preparing an indian service in march. it's going to ease restrictions to attract foreign carmakers. customized incentives to boost investment grade malaysia gradually losing the reins after
detecting the national carmaker. a voracious appetite for deals that shows no sign of letting up . it is said to have entered direct talks with deutsche telekom about merging t-mobile u.s. with sprint. >> good morning to you. this is according to people familiar with the matter and apparently a deal is still months away. over worth it just to go who the major players are to set the stage for you. we have softbank, which already owns sprint. and we have deutsche telekom. is looking to work with softbank's sprint to create a deal through cash, and all-cash offer that would give each company a better position to go against verizon and at&t. what we understand is that softbank is looking to secure $20 billion in financing so they can provide deutsche telekom
this deal in cash. they're speaking to banks, including goldman sachs and credit suisse. there are several unresolved issues. one, the actual cash stock ratio. we don't know what that is. two, i will sprint be integrated? -- how will sprint be integrated? >> what are the possible hiccups here? it is the case, regulators, u.s. regulators could botch this deal because the last thing they want to do is reduce the number of players. they want to increase the number of players in this space. interestingly enough, there is a company called dish network which is the second-largest satellite tv operator in the u.s. and they can facilitate a deal. if sprint agrees to host dish's wireless airwaves on its network, allowing the satellite company to enter the mobile phone business, the regulators
may improve a sprint takeover because he would increase the number of mobilephone operators and you would not reduce the competition, you would make it more fair. >> thank you so much for that. due outgdp figures later this morning, which are expected to confirm the nation's ace of growth is slowing. stephen engle joins us from beijing with a preview. >> authorities are trying to manage down growth here. there are a lot of risks in this economy. there's overleveraged, there has been a liquidity crunch. this is all by design. we're looking at the expectations today. gdp full-year for 2014. the fourth quarter expected 7.6%, falling 7.8% in the third quarter. 7.5% during that second quarter when we had a bit of a lull.
7.6% is the median estimate 7.7% -- are expecting estimate. we are expecting 7.7%. we have this liquidity crunch in the chinese economy, and it will be interesting to see how accommodative authorities will -- is if growth becomes moderating a bit too fast. the full-year consensus for 2014 is for seven point four percent gdp growth. that would be the slowest full- year pace of growth since 1990. we have talked to many economists and said, this is getting down to that red line acceptable number of authorities for job creation and social stability. saying, this is not
something to be too alarmed by. investord to get the and market mindset around the fact that the authorities in china are going to try to control the aspects around its extraordinary growth, as you have been pointing out on the environmental side, but also in terms of dislocations that might occur in the financial markets as they liberalized a mistake markets. that means they need to contain growth -- liberalized markets. that means they need to contain growth. we could see it to ping below -- below and it should not be seen as a disaster. >> local officials have been giving their marching orders from beijing. we're getting indications that already the job performance evaluation matrix has been
changed, and many leaders at the local level are being evaluated on things like environmental protection and levels of debt. we have already seen nine provinces lower their growth targets for 2014 from 2013 that is a good indication that the central government is willing and will encourage a slower pace of growth for more sustainable pace of growth. back to you. >> that is a figure we will be watching closely, 10:00 a.m. hong kong time. up next, more on china's slowing growth. live from singapore. ♪
it's monday morning and some events we are following for you this week. tuesday, the imf gives its update on the state of the world economy. in october, the imf protected goebel -- global growth would pick up in 2014. last week christine lagarde indicated an upgrade is possible. is alsotical standoff one we're watching in bangkok. prompting a second straight rate cut when the thai central bank meets wednesday. rising currency, will it hurt hyundai? results are due the 23rd of january and analysts expect profit rose 20% last quarter even though the carmaker has warned.
the big topic of discussion, legalizing casinos here. we are also looking ahead to china's fourth-quarter gdp today. our bloomberg so they expects growth strode -- slowed. let's get more on the week ahead in asia with our guest. he joins us live from singapore. good to see you this monday morning. hope it was a great weekend for you. >> very good. >> will it be a good week for china as we get fourth-quarter gdp coming out? it is expected to slow down. what do you think the momentum will be for china in the months and quarters ahead? >> i was just watching the show earlier on and we're looking at china basically slowing down from 7.8% to 7.6% in the fourth
quarter. the fourth quarter of last year was a high base and so the slowdown in growth is partly because of the basis. , we see chinese economy growing between seven percent and 7.5%. we think the governor but will try to help keep economic growth -- government will try to help keep economic growth in that range. i think the outlook for china is not as bleak, the government is trying to rebalance the economy. going forward, the chinese down, but slowing that is priced in. the government has preempted markets about the slowdown because they want to see a better balance between the growth figure and the quality of growth. they want to ensure the growth is well sped out and -- spread
out and driven by domestic demand. >> it is the weakest growth in 24 years in china. regardless of these reforms nascent, we're seeing signs of that still. >> it is one of the weakest growth rates china has experienced, but the kind of growth rate that china experienced over the last four growth rates of nine percent, 10% is not sustainable. in one case was an issue. the side effects of its strong growth, and the new chinese leadership wants to ensure that the negative impact of heavy growth is not there. they're trying to engineer a slowdown and ensure a more sustainable pace of growth to ensure growth is not led by credit fueled investment demand, but by domestic demand. trying to create greater
urbanization, more infrastructure spending. the markets will accept the fact that even though the growth will be the weakest in several decades, it is something that china eventually has to face ninethe road because percent, 10% growth rate is not sustainable going forward. >> if you look back, away from china and look at the broader region, if you take a look at what is happening in the u.s. this week in terms of earnings and those nations in china -- asia that are leveraged to the u.s. economic recovery, what do you see this week for asian markets? about 10%we have had of s&p 500 companies announce the results so far. 67% of those companies have beat revenue expectations. exceeded earnings expectations, below the historical average of 63%. in this week we have another 60 companies on wall street announcing results.
we are keeping a close eye on those numbers. you need to see companies beating expectations for investors to be reassured that the recovery we have seen on wall street and the u.s. economy is really gaining traction. the guidance from the ceo's of , and whatanies happens here in asia. >> what would be your investment focus for this week and this quarter? we thinkahead, equities are still the way to go. you look at how markets have performed so far this year. we have not had a fantastic start. for example, we see more volatility in the markets in the coming week, especially with the u.s. earnings season. where we see the best prospects
are in developed markets, markets like the u.s., japan and europe compared to here in asia where economies are facing headwinds. >> i want to ask you one quick question before i let you go. boj is expected to meet this week. do you think there will be a slight chance that it pops up stimulus? >> it is hard to say. i think unlikely. in other words, to continue with , thebond buying program boj will probably use its ammunition, fire its bullets closer to the increasing sales tax come april and perhaps after that. he wants to watch how things are panning out and so far they are doing well. it is on track in terms of meeting its two percent
inflation target. i don't see a reason why the boj should change track right now. perhaps it should reserve some of its bullets for later, when the sales tax comes into effect. >> that is in april. oh cbc bank, vp of wealth management. thanks for joining us this morning. up next, the chairman of development. ♪
ofhong kong is home to some the most expensive property in the world, with some analysts warning the market is overheated. the biggest commercial landlord in causeway bay remains consummate about future -- confident about the future. i think the property market given supply and demand will continue to be strong. there will be an and flow. is strong. i have to look at causeway bay for us. the retail side will be strong. not going to be strong because it's not going to be strong, we have to continually enhance it. we have a new building coming out. we are just about to develop some plaza. , we will notime
stop at making sure every single building gets updated and enhanced on a continuous basis. we are optimistic. -- of coursekong there will be bubbles, different ups and downs, but we feel very confident in causeway bay and we will continue to be resilient. >> a lot of your peers and property developer rivals are now looking at hong kong this aar and looking at perhaps significant drop in rents and property prices because of the property curbs. many are expanding overseas and are looking to the united states and europe. why aren't you looking? >> we will always look at opportunities. however, we feel in causeway bay we are still reasonably
resilient. made sure we have a balance of not just the offerings from high-end to the urban and chic and, but we also make sure we service the local community as well as the tourists, which includes a large slice of mainlanders. we don't just focus on the mainlanders. they are an important part for but we have always focused on our local, loyal customers. it is important to have a balanced portfolio and balanced user portfolio as well. other stories making headlines around the world, italy's berlusconi is making a comeback after having been thrown out of parliament last year for tax fraud. and hasemain leader struck a deal with the democratic ready to push for political change.
berlusconi says the deal will consolidate italy's biggest parties and simplify the system. lightning is being blamed for brush fires burning out of control in new south wales, australia. emergency services tackle more than 90 separate laces. the most serious is burning 100 kilometers west of the capital, canberra. melbourne swell third in 40 degree plus heat for four straight days last week -- in 40 degree plus heat for four straight days last week. ♪
>> we hope you had a great weekend but it is monday morning. it is 7:30 in hong kong, 30 minutes away from e open of g in jan and south korea. you are watching "first up." australia's big banks are at their highest financial crisis. dividends expected to follow. thailand's risk of default source as street protests -- turn as street protests
violent. investors love casino stocks. here is one that really stands out. 0.7%tion in australia rose in december from a year ago -- a according tother, a report by tb securities. this ahead of the official inflation figure coming out on wednesday. a quick check on markets in australia. that's what it is, a third of 5291 is yourown, level there. the aussie dollar continues to drop, 87 u.s. cents is your level ahead of chinese gdp figures coming out today. new zealand also in the red, fractionally lower, pretty much flat. the new zealand dollar spot is unchanged tom a 82 u.s. cents -- unchanged, 82 u.s. cents.
374 and itclosed 15 looks like it is going to add a 15 734 andto that -- it looks like it is going to add a few points to that. bankstralia, the big four trading at their highest levels since the financial crisis, leading to hopes of larger dividends. will investors get that? let's get to paul allen in sydney. what's driving this recovery in aussie banks? >> simply put, the low cash rate. the reserve bank of australia has the cash rate sitting at this record low 2.5%. the big four banks have been passing those savings on. sign-ups for new mortgages as a
result, translate into better dividends for shareholders. the average interest rate is 5.95%, the lowest since 2009. numeral it approvals are up 25% -- new mortgage approvals are up 25%. shares on the big emma have rallied 30% since 2011 -- four have rallied 30% since 2011. eight cuts since then. 5.4% dividend is expected to rise 5.5%. be warned, they're not cheap. >> it's not cheap but it is great if you own banking stocks already. is it sustainable? we were looking the prices today.
they're all down a little. $75.28, that certainly is not cheap. the other banks, national australia, 1.8 times book value. cheap at all. they combine for almost a quarter of the australian share market's. this is something analysts do warned about when they talk about the aussie banking stocks. they are not priced to perfection, but the share price has barely moved. another interesting thing happening this year is what the treasurer calls a root and branch inquiry into the banking system, this is the inquiry -- big you have four big too to fail banks, there is concern about the impact they have on the financial system. that inquiry will report back in november. >> time to check some other
stories making headlines this morning. >> more disciplinary action. four moreinst traders. of manipulation first reported last june. morgan stanley at the highest level in more than four years, the winner among the biggest u.s. banks which have reported fourth-quarter earnings. profit at morgan stanley beat estimates friday. tokyo electric planning to invest in its post-oshima future. future.fukushima other sources of energy being used. >> thailand's antigovernment
protests of taken a violent turn, with dozens hurt in separate grenade explosions. it's not known who carried out the attacks but each side is blaming the other. the implications of what is turning into violent protests. >> the government and protesters have said they wanted to avoid this. one person dead as a result of daily bombks, near blasts, explosions rocking these protest sites. yesterday's attacks came at the .ictory monument road test site 28 people wounded and increasing questions as to who's responsible. some reports suggesting the protesters themselves may be responsible in an effort to try government.e
the most highly respected university in that country, that is where one person was killed in police have released an image of the grenade suspect, the bangkok post reporting they want to question a former aide to an np, a member of parliament in the democratic party. footagee released cctv that allegedly captures the suspect throwing that grenade friday. think about who best benefits from violence. a lot of people have been saying that the desire to have military intervention to flow through and really settle things and perhaps instigate another coup, that is something the academics and everybody has been talking about. but what is the army saying?
>> the army is hugely powerful and thailand and so far in this dispute it has appeared, tried to act as a peacemaker, saying it would support talks between both sides. there are those who say well we are witnessing in bangkok is essentially a slow-motion coup. the army chief has been somewhat unclear on whether the army would move in that direction. the key question is whether the enacts emergency. mum buttary has stayed they moved assets into place two weeks ago in an around bangkok. if these protests continue to see violent attacks like we have seen over the weekend, speculation suggests or one could deduce that the military would likely have to step in. that's exactly what history
books tell us. among the analysts, there's one casino getting the most loved. the top best. -- bets. who do we love? >> it's very subjective. it's a favorite among analysts. if you go back on census ratings, essentially putting together all the calls from the street, you're looking at 23 analysts. we are using the u.s. list. that is the main listing. it has shares here in hong kong. not familiar, it operates two casinos in the cow -- macau.
shares in hong kong listed by way of introduction. >> up. it is a top-rated stock and one of the most expensive. how does it compare in terms of valuation? this, yous to look at put together all of the u.s. listed casino stocks and do apples to apples. to mgm. expensive goes if you look at it in hong kong, it is one of the most expensive if not the most expensive. look at mgm, 104. not sure if that is a resounding buy call. melco crown. where does growth, from? -- come from? they're not growing as fast in macau.
they had the studio city coming up in macau and manila this year. >> in terms of the pipeline, they're supposed to be a bit of a dip in 2015 picking up again. >> yes. >> casino high rollers exclusive perks offered by competing resorts. now there's a perk that is blowing all the others away, a new nightclub in palencia, a table worth a quarter of a million dollars a night. inside mgm's pileggi o casino at the exclusive nightclub, one casinomost -- bellagio at the exclusive nightclub, one of the most expensive tables in the world. art of its value is -- part of its value is the view. 460t.
club, the fountains are made of champagne. club the most profitable in vegas per square foot. the average table here costs $8,000 a night. this 1, 200 $50,000. what makes it different? -- $250,000. what makes it different? the number of people who reserve this table in 2013, two. >> i just want to hit the button. [laughter] coming up, slowing growth in china. we will take a look at what is behind the drag winds. ♪
>> welcome back. we will get the latest check on china's economy later when beaching -- beijing releases figures. as our china correspondent stephen engle reports, the situation is expected to continue. >> s china's tallest skyscraper goes up in shanghai, forecast for the pace of economic growth are for the most part coming down as authorities launch reform and tighten liquidity to reduce financial risks in a system feeling the weight of increased debt and regulation. some economists expect china to lower its growth target this year to seven percent from 7.5% as authorities revise the marching orders for local leaders. governmententral does deemphasize gdp growth by setting a lower growth target, life would be easier for local government officials.
, they also puts the importance of local debt increase and environmental damage in the matrix. to control those issues is positive. if the central government still says you should do this, i don't know how they're going to do that. >> there's much uncertainty over other reforms as well, from environmental cleanup to cleaning up fraud on the equity markets. will beor theme in 2014 the lifting of moratorium on initial public offerings. many expect between 60 to 80 ipo's in shanghai between march and june per month. it will be interesting to see how the regulator thaws the freeze while restoring confidence in a turbulent market. >> 2014 will be an important reforms,ee if those
how they will play out. it's important to recognize that those reforms are aiming for sustainability. it's time to go into a qualitative assessment of the growth of china rather than pure numbers. >> that's not to say a hard landing is not possible. experts are uncertain and property prices are soaring again. will the government posco -- government's grip on credit cut off growth? i think there is risk of deleveraging too fast. so-the cells called -- called evidence that the highest towers are completed. guest is the chief asia economist and he joins me
at our studio here in hong kong. thank you for joining us. take a look to the north of us and the shanghai skyline, as stephen engle presented in his report -- there is concern about a slowdown and what this guy lines represent, and old economy. what is the new economy of china going to look like? >> it is focused on the domestic demand and service oriented economy, very different from the previous growth model. >> we got new home prices in china's cities rose 15%. shenzhen rising the fastest among them, despite property curbs. on one hand you hear that china's leaders are trying for reform. on the other hand, the free is
basically ignoring all those things. when you take a look at that, what do you have? story inast successful the making. the target is 10% at the beginning of the year. it's around 20%. 15% is already slow down. it's quite difficult. the growth model before focused a lot on investment. chinese money growth has been very high. beencial market has not [indiscernible] that is why everyone wants to invest, to get high yield. that is dangerous. when the government starts [indiscernible] it is already a big challenge
for this policy. >> once it starts to unleash the reins on the money market, we saw that in june and december, there was a lot of volatility. theas a message to those in shadow banking area, you've got to get your act together. weeksou see in the coming that we should be wary of when it comes to shadow banking in china? bankingal shadow already promised retail investors around 10% or higher yield. it seems to be impossible to realize. by the end of this month, billion trust that you say is at the risk of a default. the firstrobably just case. but there is much more. that case will be an important
.est case you take a look back at what we're expecting today, china gdp fourth-quarter growth forecast at 7.6%, that's a big slowdown. what's your concern there? >> the growth slowdown is not a concern as long as the quality of growth has improved. 7.5% is the new government's target for the last year and this year or so. if it is already 7.6%, they achieved their target and the growth rate is still decent even though it is the lowest in 24 years. the issue is the growth model, where the new growth model is , high quality, that is the issue.
even if you have 8%, if it's not oldainable -- move from model to new model there are a lot of risks. and whether that transition will be a smooth one, soft landing rather than hard landing that everybody was afraid of. that definitely is something to watch. the chief asia economist, thank you for joining us for a preview of china's gdp coming out. still to come, toy cars get the treatment. high-technology hitting the track. ♪
for the chinese figures coming out. it looks like it's going to be flat at the open. the u.s. dollar. artificial intelligence will change the way we communicate and live. a san francisco startup hopes it will also change the way we play. here is sam grobart. most of the time when we're talking about robots and artificial intelligence would tend to think about robots in the workplace or "terminator." were not usually talking about our toy cars. that's exactly what a new toy is all about. it looks like one of those old radio controlled car sets you might play with. it is more advanced than that. your smart phone can work as a
wireless steering wheel, but what is more interesting is that same smartphone controls all the other cars on the track. they know where they are and you are and are adapting in real time so each race is different. we have seen this kind of artificial intelligence in videogames. into thegs all of that physical world. not only can you outrun your opponent, you can fire imaginary weapons at them, hold down a button on your smart phone and watch the car in front of you come to a screeching halt after you have zapped it with your virtual canon. all this innovation is impressive. it is not cheap. a starter kit will run you about $200. you get a track and two cars. you want more cars, they are $70 a pop. ios devicess on right now. cars will use up their battery after 20 minutes.
>> nintendo questions its own strategy. soresnd's risk of default as bangkok street protests turn violent. funding for a takeover in the united states? the latest push for t-mobile. i am angie lau. welcome to "first sores up," streaming on your mobile and bloomberg.com. to australia right now, where
the asx 200 is waiting with the rest of the region for china's fourth-quarter gdp. it is now more than one percent down. the australian dollar is weakening. in korea, the cost be just getting underway. it is also in the red. a 10th of one percent lower at the start of the session. the won is weakening. in thesome fluctuations cost be right now. japan is just opening. flat in terms of japanese futures indicators. now, it is fractionally lower as the region awaits the largest second economy to report fourth-quarter gdp. probably unchanged in 2013 from whenrevious year,
expansion slowed. the dollar yen is slightly strengthening right now. staying in japan, nintendo is losing the console battle. badlyrdware is being so crushed by the new sony playstation 4 and microsoft xbox and nintendo is when expansion slowed. forecasting a surprise loss. shares are set for a tumble here in the asia-pacific, in japan. john is here to explain what went wrong for nintendo. bidse sales outnumber the 821. -- eight to one. a delay so far. we will see what happens. a delay so far. we will see what happens. the surprise loss of ¥25 billion, $40 million. ofy are predicting a profit ¥55 billion, so a dramatic change of direction. migration to smartphones, playstation 4, xbox, competing dramatically for their space. sales -- they are less
than forecast. they have cut their forecast of forecast to a third of what it was planned to be. the game sales of software -- another massive blow. nintendo's wiif u is 4.3 million in 15 months. xbox sold 3 million in three months. >> it looks like microsoft and sony blowing nintendo out of the water when it comes to hardware consoles. what does nintendo do? how does it shift its strategy? >> software, it would seem. the man in charge does not want to give up yet. they think they have failed to find the right audience.
you they want the hard gamer? they have not figured it out. competitiveot as with advertising and marketing as for playstation or microsoft. but they are looking to have smart devices that can be used to grow the business. they are very strong in software. they provide games for xbox and playstation. for example, by spring of this year, donkey kong, super smash brothers, and mario kart 8. they may make gains, not consoles. >> nintendo used to make game boy, but who needs a game boy when you have a smartphone? amy it will bank on its titles instead, as you said. the 3ds. >> some other stories making headlines. a sunday night surprise out of frankfurt. deutsche bank warned it lost
money last quarter because of legal changes and accounting charges. analysts had expected a profit. asia wants to be a regional hub for energy efficiency. restrictions to attract foreign carmakers. will offer high-tech green cards and customize incentives to boost investment from abroad. malaysia is gradually loosening the reins after rejecting the national carmaker. survivors of the indiana crash in -- of the crash in san francisco are suing boeing over their injuries. the plane hit a seawall. airspeed warning system was inadequate and the tiles were poorly trained. there were 307 people on board. three teenage girls from china were killed. air asia is close to relaunching plans for a discount airline in japan after its partnership unraveled last summer. the biggest budget carrier has
up local partners and aims to start service in 2013. tony fernandez says the operation will avoid the new tokyo airport for cost reasons. air asia is also preparing a new indian service in march. shares of softbank coming online after a voracious appetite for deals shows no sign of letting up. it is said to have entered direct talks about buying t- mobile wallowing the purchase of sprint. away,eal could be months according to people familiar with the matter. i want to establish the key players. we have up sachs and
there is a company called dish network, the second-largest satellite tv operator in the u.s. they could be the reason this deal could go through. i can facilitate -- they can facilitate. if verizon hosts dish on its network, that would allow the satellite company to enter the mobile phone business. regulators may not approve the takeover. but u.s. regulators are most concerned about is making sure there is a level playing field and no monopoly. never you see big companies coming together, one of the biggest concerns is that they will dominate the overall market and provide very little choice to consumers. >> thanks. on the, we get more
>> markets trading in the asia- pacific. because b is the only bright spot right now, fractionally higher. the nikkei 225 and australia half a percent down at end of the raft of chinese data. he figures out later, giving us the latest check on the economy. growth expanding at the slowest rate in more than two decades. , theephen engle reports situation is expected to continue. >> as china's tallest skyscraper shanghai, for tests
of economic growth are for the most part coming down. authorities launched reforms and tightened liquidity to reduce financial risk in a system feeling the weight of for tests of economic growth are for the most part coming down. authorities launched reforms and tightened liquidity to reduce financial risk in a system feeling the weight of increased debt and regulation. some economists expect china to lower its growth target to 7% from seven .5% as central authorities revised the marching orders for local leaders. >> if the central government does deemphasize gdp growth, for example by setting a lower growth target, life would be easier for local government officials. they areounties where poor, they abolished gdp. they put important local debt increase and environmental damage in the matrix. it is very positive. the problem is if the central government still says you should do this. i do not know how they are going to do that. >> there is much uncertainty over other ambitious reforms.
environmental cleanup is leading to fraud on the equity markets. many expect 6280 ipos in china, including here in shanghai, between march and june, per month. it will be interesting to see regulator thaws the freeze while also restoring investor confidence in a very turbulent market. >> 2014 is going to be a very the freeze while also restoring investor confidence in a very turbulent market. >> 2014 is going to be a very important year. we will see how the reforms play out. i think it is very important to recognize that those reforms announced in november are aiming for sustainability, which is very important. i think it is time to go into a more qualitative assessment of the growth of china, rather than just pure numbers. >> that is not to say a hard landing is impossible.
exports are uncertain and property prices are securing -- are soaring again. will the government credit choke off any chance of sustainable growth? >> i am concerned that local government debt has risen fast. a need to slow that down. however, there is also a risk of deleveraging too fast. >> the so-called skyscraper index offers evidence that the tallest towers are often completed just as economic downturns begin. bloomberg, shanghai. likes let us assess the state of play with my next guest, even harris, cohead of research at bank of america merrill lynch. he is usually based in new york that joins me live this morning, looking very refreshed. you arrived at 10:00 last night. >> coffee is doing the trick. -is what coffee is for. but us talk about the state of play inthat state of
asia. what do you see in the u.s. economy, fundamentals improving? we are expecting china fourth quarter gdp. how does asia look for the next quarter, as we see the global conditions improve? >> first of all, the global economy is definitely improving. we have seen europe come out of recession. there have been strong divisions in the growth fears. not booming growth, but better than the bad economy a year ago. strength,., real growth of about 4%. this is a much better economy. for ishaq, there is a spillover story. i do not think asia itself is particularly strong. i think the region is dealing with a trend. slowing in china, as the economy gets passed its peak growth years. the things are still pretty good in asia.
we are expecting chinese growth to remain in the mid-seven 7.8%,t -- 7% range, maybe on the positive side. asia looks like it should benefit from this broad global pickup. >> a lot of people are overweight developed markets, including the u.s., and underweight the relevant markets. will is i thought they spread to emerging markets for the big upside when it happens. toi think you need distinguish between countries that have helped the fundamentals and the ones that have difficult external imbalance problems. as you think about what is going on now, a lot of emerging-market economies worry about the fed ending quantitative easing and raising interest rates. i think the healthier parts of emerging markets would benefit from stronger u.s. growth. will be think the fed exiting it's super easy policy unless we have solid u.s. growth.
for better economies, better the negativeffsets impact of higher u.s. interest rates. for the fragile five, which have big external deficits, they should face choppy moments in the year ahead. i do think we need to distinguish between countries with healthy external balances and those that have external imbalances. >> a north asia split from southeast asia? >> countries like indonesia, the sale, india. -- brazil, india, turkey, with the unrest there. these are countries vulnerable to a rapid rise in u.s. interest rates. you do not think u.s. rates are going to go up dramatically, but i do think they will be rising enough to create moments of pressure in those markets. >> christine lagarde said the recovery in the euro zone and u.s. are still very good, likely to bump up the forecast for the imf.
it still feeble. still need support, especially with janet yellen taking the helm of the fed. christine lagarde mourns that perhaps one should not step the foot off the gas pedal just yet. >> i am more concerned about europe, because i do not see the european central bank having the political support, or even support within its own institution, to hit the accelerator. they are not ready to do the kind of aggressive policies that the reserve and bank of japan have done. i am a little concerned they do not have the tools to get the economy into second gear. europe is growing numeral one percent now. that is a pretty weak recovery. i am much more up to mystic about the u.s. i think they janet yellen had will continue to keep their eye very slowly.exit i am very encouraged by the data flow recently in the united states. you have had strong data. the first time i think in this
recovery where you actually feel like maybe this is the beginning of a normal cyclical bounce. >> minus the jobs report that surprised everybody. >> if you look at the data, that is the exception to the rule. we have had better data across the board. if you add up -- >> isn't that the most critical data point? >> it is. the most important report in the economy. subjectdata reports are to error. one of the more amusing things about forecasting payroll is we are supposed to come to the nearest thousand in american jobs, a country which has 150 million workers. the expectations around the accuracy of forecasting are too high. step back and look at the data flow. we are looking at an economy that has picked up. moreover, i think we are seeing better fundamental back out. we do not have big new fiscal austerity coming. we do not have the same level of
dysfunction in washington. >> they just passed the house bill, a budget. >> they had three major bills in a row that have passed, each time with more bipartisan support. i think the shutdown was a good thing in the sense that it forced everyone to say, do we really want to be doing shutdowns? >> there was a lot of political blowback from voters. >> there was, and we are in an election year. i think moderates in the republican party have said, we do not want to be seen as a radical party. we want to be seen as a party that wants to govern. this has been a big negative for the economy, threatened shutdowns every six months. i think we will get some common washington for the next year. that makes me optimistic. >> back to the u.s. as the engine of growth for the world economy. thanks for flying into hong kong for us. up next, thailand's street road tests turned violent with a series of explosions.
details, and really the implications for thailand as we watch these protests intensify. >> this violent turn they seem to have taken is what both sides have warned about. question is, who is responsible? there was a bloody weekend in bangkok. one killed since friday afternoon, according to the emergency medical services stop -- services. grenadelows friday's attack in the heart of the city near the university tom at the most respected university in thailand. we are talking about the area around the main shopping district, where most of the five-star tourist hotels are. to see these attacks is certainly worrisome not only for the people who fell victim to them, for tourists who may be traveling to the thai capital. it also adds to this economic uncertainty.
the default risk is soaring in thailand. pulled $4 billion. money managers are charging more for credit default swaps. the market is reacting. those on the ground are worried about the situation. the police today are pledging to step up security. they are tightening security in bangkok and in the southern provinces. >> here is what everybody is waiting for. how is the army characterizing these attacks? also, it you covered the protests in 2010. how does this compare? >> 2010 was particularly bloody. arts of bangkok in that protest turned into war zones, really. the area around zucchini park -- ni park. we saw the government sending in police and the army to break up the protests. our areas set up as live fire zones. it was shocking to see some of
these scenes there. this is a very different situation. these have been largely peaceful protests. the people are largely middle- class, not necessarily the kind of anarchists you might think of when you hear of typical antigovernment protest. to put this in perspective, 90 people were killed in 2010. so far, i believe the running total since last october is eight people. if this violence continues or intensifies in bangkok, the real concern is, how bad will it get, and who will step in? the military. >> with a statement that they will try to get the prime minister into custody. breaking news right now. nintendo just opening in japan. as we heard, some very disappointing news from nintendo. hardware is being so
badly crushed by the playstation and xbox that nintendo is forecasting a surprise, down more than 15% at the start of the japanese session. markets training here in the asia-pacific. let us see how the nikkei is doing. nintendo is not part of the nikkei 225, but we are seeing the nikkei 225 under pressure this morning ahead of the chinese fourth-quarter gdp. everybody is really waiting for these figures that are projected to be the slowest it 20 years. the cost is down. the asx 200 is down. china is one of its biggest trading partners. up next, we are going to look and sri lanka's plan to boost investment from abroad. ♪
expectations that growth will continue to slow in china. the biggest tumble in years. nintendo forecasting a surprise loss. where to put your money? colombo hopes the answer is sri lanka. .arkets training the asia-pacific is in the red. cost before joining at the start of the session. right now, 0.3% down, while the , all ahead0.7% down of the china fourth-quarter gdp figure. nintendo is also tumbling this morning. it's hardware is being so badly crushed by the new playstation and xbox that nintendo forecast a surprise loss. right now, it is down more than 15%. -- falliggest flaw since march of 2000. a 14 year difference.
it fell as much as 18.5%. it was a bit late to the opening. eight cells to one by -- eight sells to one buy. that gives you the spread. it fell 17% in new york. it could still surprise with a forecast of ¥20 billion. a lot of christmas shoppers did not buy their games are there hardware. they bought the xbox or playstation, or even a smart phone. they did not buy the wii u. they cut their forecasts as well 2.8 millionsales to units, from 9 million. the gain sales from -- the game sales from 90 million to 30 million.
they have only shipped 4.3 million in 15 months. compare that to 4.2 million by playstation in two months. a dramatic change in direction is required, as they have announced already. his is a massive low. >> investors selling off. it is almost as if nintendo is losing focus. it has to shift its strategy. >> they make games for playstation and xbox. they may shift in that direction. will not want to give up on hardware yet. the market strategy was not great. market a hard-core gamer, a lifestyle gamer? one of the biggest publishers of games canceled all of their wii u projects. they are not convinced. they have to convince the likes of ea games going forward.
will they go. for and avoid the console, just go games? or stick with games for now? theirould redefine strategy, but they need to play serious catch-up. >> maybe they need to be an electronic arts, an electronic arts looking at the market share and saying, maybe our roi is not worth it. >> it is more pressure to make a console than it is to make software. >> investors are reacting to that today. lanka continuing its campaign to attract southeast asia money with investment in singapore. they became minister of finance and planning joins us. thank you so much. let us talk about what we are seeing in the global economic environment with the u.s. fed starting to taper.
fromw a lot of outflows emerging markets back into developing markets. lanka, one of the key drivers you see as necessary to foreign inflows and support the economy? is one of the leading and the fastest-growing economies in asia just now. we have a very vibrant stock exchange. and at the present about 40% of our capitalization comes from foreign investments. to expand that, increase it very much, with you and tax incentives. the economy is growing very fast. local companies are growing very fast. particularly in the tourism
sector and the financial sector. a hub in south asia, very a midpointdia, and between the middle east and the far east. the potential is there. in the past, there was the wall. now, the economy is integrated. certain parts of the country that were outside the economic growth areas have now been integrated. it is quite attractive to foreign companies to come in. we are a heartland. we are a good jumping off point to india, bangladesh, pakistan, and the other countries. >> you mentioned that the war ended a few years ago and the economy is regaining its fiber and see. at the same time, human rights violations is a big concern for foreign investors as they look at the broader sri lankan story.
are you concerned that is going to impact the flow of foreign investment into your country? >> once people look into the situation, the debate is really about what happened during the war, not regarding the current situation. not about the political environment or the social environment. or the economic environment. investors are more worried about what is going on now. as far as human rights matters are concerned along with the set , lessonscommission learned and reconciliation commission -- we are in the process of implement a map. we can see progress all the time. those who are investing in sri lanka will do their detailed studies, and that will show that things are quite normal in the country. >> deputy minister, how do you
andsri lankan companies capital markets performing this year? what is your global economic outlook? what do you think the flow through will be like for sri lanka? >> we are very optimistic. after the downturn in the u.s., we are not as exposed as india or china. our export sector is not that vibrant. domestic agriculture is very good. we are very self sufficient in most of our commodities. we are a stable country. i think we are a country which can generate a good return to the business people who are interested in investing there. >> earlier this month, sri lankan central bank cut one key
interest rate against the advice of the imf. are you sufficiently confident that it can withstand the rate cut? or do you think you should have heeded imf's advice? >> we have a dialogue with the imf. sometimes we agree. sometimes we disagree. we have a strong central bank which has delivered the goods. major point of contention with the imf. we want to stimulate the economy, which has been growing quite fast. i think up until now the decisions taken by the central .ank have been quite ok we do not have a major problem with the imf. >> if you take a look at the performance of the equities, the stock exchange up this year
6.9%, what policies do you want to implement in place in the coming months to make sure the equity market remains strong and growing, and to attract foreign dollars into sri lanka? budget, weurrent have given many incentives for private countries dutch companies to get listed. there is a 50% cut on corporate taxes for those companies that want to list in the stock exchange. i think we will see in the coming months a large number of new listings. policies, seeing entry of foreign capital, exit of foreign capital, at no time have there been constraints put on the easy movement of capital into sri lanka. beenis something that has
greatly appreciated by investors. as the global economy picks up, particularly in the u.s. economy, we think there will be much greater interest in the sri lankan capital market. and in view of the fact that some of our computing countries in the region are not doing so well, sri lanka is now quite the leader in the south asian region. also, the fact that our strategic location, close to of the- the largest 2/3 sea routes, particularly those taking oil from the middle east going to to china, are stop by sri lanka. we have invested very larger in infrastructure. a newport has come up. a new airport has come up. a lot of new highways are now spending the whole country. think investors will do their
homework before they invest. improving ins are the country. >> critical as well for those investors looking to increase their exposure in emerging markets. thank you to the sri lankan deputy minister of finance and planning, joining us from singapore. an exclusive interview with the chairman of hyson development after this. ♪
the sydney opera house, is also under pressure ahead of china's fourth-quarter gdp, the second largest economy and second- largest trading partner. big four banks are trading at their highest level since the financial crisis, leading to hopes of ever larger dividends. let us get over to paul allen in sydney. what is driving this recovery? >> it is cheap money. the cache is still sitting at the record level of two point five percent. the banks have been passing those savings onto the mortgage holders. you can get the lowest mortgage since 2009. the average is about 5.9%. 25% has been fueling a increase in mortgage lending from november of last year.
fueling an only increasingly silly housing market, but you can get right dividends if you happen to be holding the stock of one of the big four banks. since have rallied november 2011. the dividend yield -- you can calculate that at 5.4%. it is expected to grow to 5.5%. if can expect solid returns you are a shareholder in one of the big 4. they are not cheap. the commonwealth bank of australia, the largest of the big 4. great if you own the banking stocks, but is it sustainable? >> you do not buy them because they are a bargain. it is because of their dividend yield. even last year when they announced earnings, most of the big four posted solid results. the shares barely moved.
they are priced to perfection. going ahead, if you look at some of the banks up close, commonwealth bank trades at 2.7 times its book value. westpac, anzralia, , are all trading around double book value. ofy have combined assets $2.2 trillion, 50% larger than the entire australian economy. how long can it continue? the government is running an inquiry into the finance sector in australia this year. the treasurer is calling it a root and branch look at the health of the financial sector. when your big four banks get to the size, solid as they are, in the habitable questions arise, revolving around the theme of, are the two big to fail? in november,back so we will be eagerly awaiting the results. >> paul allen out of sydney.
, utilitys in australia stocks in hong kong. safe investments. as of late, the sector has really been volatile. on,a look at what is going we are joined by a senior energy analyst. why are things so volatile in hong kong? >> i think one of the major reasons is the utilities here were supposed to be lice -- nice and boring, give you a regulated, low risk return. by 2018, we are going to get a new regulation coming through. the market is a little bit on the pessimistic side as to whether the hong kong utilities will get as good a deal as they got in the past. -- 20%s basically a $.20
return on fixed assets, one of the most generous returns around the world. spinwer assets wants to off the hong kong business. why specifically? >> probably two reasons. it is a great time to extract some cash out of the hong kong business, given uncertainties going forward. the other is that power assets are investing overseas quite aggressively, looking for developed markets such as australia, the united kingdom, where you can get regulated returns but still pretty attractive returns. they are going to be able to get several billion u.s. dollars out on this particular deal, which they can redeploy to invest overseas. a bloomberg senior energy analyst on hong kong. sticking with hong kong, it is home to some of the most expensive property in the world, with some analysts warning the
market is overheated. the biggest landlord remains confident about the future. we spoke exclusively to its chairwoman to ask her why. think the property market, given supply and demand, will continue to be strong. of course they will have m and flow, but i think it is strong. i have to look at causeway bay. the retail side will be strong. but it is not going to be strong because it is going to be strong. you need to continuously enhance. we have new buildings coming out. develop at about to plaza and a court. time, we will not stop making sure every single building gets updated and enhanced on a continuous basis. i think we are optimistic. we feel hong kong will go through -- of course there will be bubbles.
of course there will be different ups and downs. but we feel very confident in causeway bay we will continue to be resilient. lot of your property developer rivals are now looking at hong kong this year, looking at perhaps a significant drop in property prices because of the property curbs. they are seeing that perhaps in china as well. are expanding overseas, looking to the united states, looking to europe. why aren't you looking? >> we will always look at opportunities. bayver, we feel in causeway we are still reasonably resilient. portfolio, wer have made sure we have a balance of not just the offerings, from high-end to the younger and, that also to make sure we service the local community as well as the tourists.
the top take. which is it? recommendations the operator of two casinos in macau. these are the u.s. listed shares. there are listings in hong kong. .1 out of 23 say buy it is really the favorite among analysts across those listed in the u.s. and here in hong kong. there are shares listed in hong kong. a listing by way of introduction. just more than two years ago. shares of that company and other justg stocks -- it has gone one way. galaxy entertainment is about triple the levels 12 months ago.
for those listed here in hong kong at the bottom of your screen, you have 10 analysts. hold, and one sell. stock andhe top-rated the most expensive. how does it compare in terms of valuations amongst its rivals? >> that is obviously the question right now for investors. the most expensive. it had a run in the u.s. and here. to be to make this an apples to apples comparison, it is not the most expensive. that goes to mgm. , it ishere in hong kong one of the most expensive. board,look across the whether it is galaxy, sands , as far as consensus ratings, these are not far from one another.
♪ >> i'm rishaad salamat and this s "on the move." biggest tumble in years, the struggles facing nintendo and wii. he latest push for t-mobile. we're going to preview china's a.d.p. numbers. >> those numbers are coming up in about an hour. something's reshaping ahead of that. what's going on? >> wre